WiseTech Global Ltd (ASX:WTC) Continues To Draw Investors On Strong Growth Prospects
Alexandria-based WiseTech Global Ltd (ASX:WTC), which helps logistics companies globally to make supply chains more efficient, acquired two freight rate management solution providers. WTC bought a leading global air freight management solutions provider Cargoguide and one of the top ocean freight rate management solutions providers, named Cargosphere. US-based Cargosphere costed $11.5 million and Netherlands-based Cargoguide was priced at $6.9 million. Both companies collectively generated $6 million in revenue in 2016 with no earnings to boost WTC’s bottom-line. These are strategic acquisitions to consolidate the company’s position as a leading logistics solutions provider. “Both solutions will also enhance existing rate management capabilities within our CargoWise One platform… This will ultimately create a pathway to the deeper automation necessary to substantially increase productivity for freight forwarders grappling with exponential increases in volumes and margin pressure”, said CEO Richard White. WTC has doubled revenue in two years, with forecasts pointing to more than 60% growth over the same time period ahead. Company shares are up 52% year-to-date with growth and quality being the key drivers. The company hardly has any debt and seeks funding from its shareholders for growth expenses. The long-term growth strategy is organic-focussed; however, WTC says these “small, targeted, valuable acquisitions” will act as catalyst as it adds new geographies and adjacencies to its current capabilities as a software solutions provider for logistics execution in more than 125 countries. Although it doesn’t generate much of a free cash flow for shareholders at this point, the continued growth in operating cash flows paints a bright picture of its future. “The solutions provided by Cargoguide and by Cargosphere enable freight forwarders to save millions of hours annually and optimise margins by accessing, organising and systematising rates, contracts and quotes” commented Mr White, calling the acquisitions a major boost for the freight forwarding industry.